The Recording Process
Accounts, Debits and Credits
Account is an individual accounting record of increases and decreases in a specific
asset, liability, or stockholders equity item.
Accounts always consist of three parts:
a debit (left side)
a credit (right side)
Debit and Credit
When comparing the totals of the two sides, an account shows a
if the total amounts of debit exceed credits.
An account shows a
if the credit amounts exceed the debits.
For each transaction debits must equal credits
Under the double-entry system the dual effect of each transaction is
recorded on the appropriate amounts
Increases and decreases in assets have to be recorded in opposite
form than increases and decreases in liabilities.
Debits from an asset account usually
Credits from a liability account usually